Tata-Mistry spat: The journey from boardroom to courtroom
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Mumbai: Marked by war of words, allegations and counter allegations, the two-and-half month-long bitter feud between Tata Sons and its ousted chairman, Cyrus Mistry, which emanated from a conflict between two personalities in the boardroom, has now morphed into a full-fledged legal wrangling. Since December, altogether six lawsuits have been filed by different stakeholders of the $103 billion conglomerate.
Here’s a quick wrap of the legal rounds:
11 January: The Mistry family firms file a contempt of court petition against Tata Sons, Cyrus Investment Pvt Ltd and Sterling Investment Corp Ltd, which together hold around 18.5% of ordinary share capital in Tata Sons. The Mistrys filed a contempt of court petition at the National Company Law Tribunal to refrain Tata Sons from holding the extraordinary general meeting to remove Cyrus Mistry as the director. The holding company of the Tata group has scheduled the meeting for 6 February after being requisitioned by four Tata trusts. The petition claims that Tata Sons calling the extraordinary general meeting (EGM) violates the undertaking given by its lawyers when the NCLT heard an earlier petition filed by the investment firms on 22 December. The petition sought punishment including simple imprisonment for a term which may extend to six months, or a fine which may extend to Rs2,000, or both, for contempt of court by all those involved, including Tata Sons’ interim chairman Ratan Tata, directors of the holding company and some trustees of Tata Trusts.
23 December: Industrialist Wadia filed a criminal complaint against Tata Sons, its interim chairman Ratan Tata and the board of directors of the Tata group holding company, for allegedly defaming him. The complaint, filed in the court of the additional chief metropolitan magistrate at Ballard Pier in Mumbai, said Tata Sons, Ratan Tata and the board had individually and collectively defamed him by printing, publishing and circulating “false, frivolous, baseless, incorrect, libellous and defamatory material”. The material refers to the special notices which were sent to shareholders on the letterhead of Tata Sons and signed by its chief operating officer F.N. Subedar summoning extraordinary general meetings to seek his removal as a director from three group companies. Wadia’s criminal complaint followed a Rs3,000 crore civil defamation suit he filed earlier in December against Ratan Tata and the board of directors of Tata Sons for seeking his removal from group companies on grounds that he was working in concert with Mistry, the ousted chairman of Tata Sons.
20 December: Firing the first salvo, two of Mistry family firms Cyrus Investment Pvt Ltd and Sterling Investment Corp Ltd approached the National Company Law Tribunal (NCLT) to protect their interests against mismanagement and oppression of minority shareholders at Tata Sons. Tata Sons’ interim chairman Ratan Tata, the firm’s board of directors, Sir Ratan Tata Trust, Sir Dorabji Tata Trust and their trustees are among the 23 respondents named. The petition seeks intervention to address a governance breakdown in Tata Sons and (help) regain its lost ethical ground. Abuse of the articles of association by some trustees will also be part of adjudication. Some imprudent business decisions and actions that lacked probity will also come under scrutiny, Mint reported on 21 December citing an unnamed person. In its hearing on 22 December NCLT asked Cyrus Mistry to file a rejoinder within seven days in the petition filed by his family-controlled firms against Tata Sons Ltd. The tribunal asked Mistry to prove his allegations against Ratan Tata, Tata Trusts and others named in the petition with material facts. The next hearing is on 31 January.
16 December: Nusli Wadia , the chairman of the Wadia group, filed a Rs3,000 crore defamation suit against the holding company of the Tata Group and its directors. The defamation suit was filed after the Tatas issued notices to remove Wadia as a director from its group firms. Wadia, who was an independent director of Tata Steel, Tata Motors and Tata Chemicals, had earlier claimed that he had been targeted for his “independence of mind and action” and he is not required to act in their interest as he does not serve the Tata group in any capacity.
13 December: Four minority shareholders of Tata Group firms approached the Bombay High Court challenging Tata Sons Ltd’s move to remove Nusli Wadia as independent director from three group companies. Minority shareholders Janak Mathuradas, Yogesh Mathuradas, Chanda Mathuradas and Pramila Mathuradas, have also challenged a rule in the Companies Act which allows promoters to vote on a resolution seeking removal of independent directors. They wanted the court to restrict the promoters from voting in the resolutions proposing to remove Wadia. Tata Sons has requested the court to make it a party to the proceedings. Subsequently, on 17 December, the Bombay High Court allowed the extraordinary general meetings convened by three Tata companies—Tata Steel Ltd., Tata Motors Ltd., and Tata Chemicals Ltd., to vote on the removal of Nusli Wadia as independent director, to proceed as per schedule. Shareholders of these companies voted unanimously and Wadia was ejected from the board of all the companies.
7 December: Marking a beginning of what now looks like a protracted legal battle, six shareholders of Tata group companies moved the Bombay high court claiming damages from Tata Sons interim chairman Ratan Tata and 29 others for losses suffered by investors after shares of key group companies fell following the removal of Cyrus Mistry as group chairman in October. Pramod Shah, Kalpana Shah, Vinesh Shah and Jesal Bhansali have filed the petition through Markand Gandhi & Co seeking unspecified damages.